There was a time in the past when you had to walk to your local bank and get approved for a loan in order to start a business. That’s not always the case today, thanks to the emergence of alternative lending.
You see this shift worldwide. More and more borrowers are moving away from “one-size-fits-all” bank loans to alternative business financing options that are not only faster but more tailored to how modern businesses actually operate. According to a report from Market.us, “The global alternative financing market size is expected to be worth around $46.2 billion by 2035, from $10.3 billion in 2025, growing at a CAGR of 16.2% during the forecast period from 2026 to 2035.”
While many individuals make use of alternative financing, business borrowers represent the majority of users, making up 71% of the demand. This is because nearly 40% of businesses struggle to get their bank loans approved due to lack of collateral or insufficient documentation requirements.
In the U.S., the alternative lending market is exploding. A report from Research and Markets stated that the alternative financing market in the country is valued at around $63 billion and is projected to hit more than $105 billion by 2029—nearly double. The implication is that alternative lending is moving away from being a “tech thing” or “niche” experiment into the regular lending market.
But, who exactly is using this money? Here are the top businesses that use alternative lending the most in the U.S.A.
- Retail & Restaurants
Both the retail and restaurant industries operate on a seasonal business rhythm. This means that their activity levels, revenue, and staffing needs fluctuate predictably throughout the year. These recurring, short-term patterns are driven by weather, holidays, or school calendars. For instance, retail businesses typically see a surge in sales during holiday seasons, while restaurants and other businesses in the tourism and hospitality industry see peak activity and revenue in summer or school holidays.
This means that outside of those peak seasons, these businesses have to deal with surviving slow periods, during which they often turn to alternative financing to get through the next peak season. Most restaurants and retail businesses often turn to merchant cash advances (MCA) to pull through.
According to Market Research Future, the retail sector, comprising brick-and-mortar stores and e-commerce platforms, and restaurants are the top 2 industries in terms of market share in the MCA market. Retail businesses need quick access to capital for inventory, tech upgrade, and operations, whereas restaurants require funding for expansion.
An MCA works like this: Businesses receive a lump sum of cash up front with the agreement that they will pay it back by giving the lender a fixed percentage of their daily credit card sales, which provides a flexible safety net. When they have a slow period, they pay back less, while if they have more sales, they pay back more. However, this often comes with high fees, which make it a more expensive financing option than a bank loan in the long run.
- Trucking & Manufacturing
Another group of businesses that use alternative financing are those in the trucking and manufacturing industries. These business-to-business (B2B) companies typically have high invoice volumes and long receivables cycles, which means their biggest headache is the “waiting game.”
For instance, a trucking company might deliver a load today but have to wait 30, 60, or 90 days to get paid. In the meantime, they still need funds to pay for fuel, driver wages, and maintenance. Manufacturers also deal with similar payment terms and/or delayed payments.
To smooth out their cash flow, logistics and transportation companies like carriers and freight brokers turn to invoice factoring. According to a report from Fortune Business Insights, manufacturing and transportation & logistics make up most of the global factoring market share in 2026.
This alternative financing option allows these companies to “sell” their unpaid invoices to a lender in exchange for a cash advance of around 80% to 90% of the invoice value upfront. When the invoices are finally paid, the lender takes their cut and a small fee and gives the remaining balance to the business.
- Minority & Micro-Businesses
Another group of businesses in the country that are more reliant on alternative financing than others include minority-owned businesses (MBEs) and micro-businesses (those with no employees other than the owner). Aside from using their personal funds, these businesses have learned to latch on to online lenders as a vital lifeline.
In the case of many MBEs, they often face higher hurdles when walking into a traditional bank. Research shows that Black and Hispanic business owners are more likely to apply for traditional financing than white owners, but they are significantly less likely to receive the full amount they need or are more likely to receive no financing at all.
Meanwhile, micro-businesses use online lenders at much higher rates than larger firms because they often lack the formal credit history, audited financials, and other “hard information” that big banks demand.
Startups
Businesses that are just starting out often turn to crowdfunding as an alternative source of capital. This alternative financing option allows them to reach a large number of people, typically via the internet, who are willing to give small amounts of money for their capital. In exchange, these contributors receive a product (reward-based), a share in the company’s equity (equity-based), or payment for principal plus interest (debt-based).
In 2024, the U.S. crowdfunding market was valued at $0.65 billion ($650 million) and is expected to increase to $2.06 billion in 2034, with a projected CAGR of 12.2% from 2025 to 2034, according to this report. The major driving force of this increase is rising interest in equity-based models and investor appetite for early-stage innovation.
From Last Resort to Primary Funding Source
Alternative lending was more of a last resort for businesses in the past. Today, it has become a primary source of funding for many businesses, especially those who have a hard time getting approved for a bank loan or credit from other traditional financial institutions.
Despite the high costs, many businesses still avail of funding from alternative financing providers. Thanks to the access to funds and speed of approval or loan release, many businesses can keep their dreams—and the economy—moving forward.
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